Supply Chain Planning Predictions for 2019 and Beyond
It is that time of year once again when many of us pontificate on what 2019 and beyond will bring. Personally I hope for World peace, the end to hunger, a cleaner/greener Earth, and lower taxes. Well, maybe someday, but I doubt many would buy into those as predictions for 2019.
The field of supply chain planning is changing quickly with the need to reduce costs to meet corporate objections, increase speed to meet customer expectations, plan for changing regulations and trade tariffs, while struggling to find and retain the best talent to lead the transformation to digital and AI enabled capabilities. With so much change taking place it’s very challenging to predict even the near future. However, I can see a few cloudy visions for the future of supply chain planning in my Crystal Ball.
The Rise of Continuous Planning
The pace of the supply chain is increasing driven by ‘The Amazon Effect’. A phrase, once sung by Queen, “I want it all, and I want it now” seems to be highly relevant for supply chain professionals. End of the day, week, or month periodic planning processes are no longer sufficient to meet shrinking customer lead-times. Speed to sense, analyze, optimize and respond is king. The concept of continuous planning where planners address opportunities and disruptions as they happen will continue to gain ground in 2019 and beyond. Continuously planning efforts could be part of a Sales and Operations Execution (S&OE) process or tightly tied to building more robust digital planning and optimization capabilities. To facilitate a continuous planning process, companies will start to move towards cross-functional teams working in a control-room type environment to address global disruptions and opportunities using advanced planning and optimization technologies.
Data is the New Oil
Supply chain data has become the new oil lubricating a company’s ability to quickly sense, analyze, and optimally respond to unplanned events. Near real-time and accurate data can be used to create a digital representation or twin of the supply chain. What-if scenarios and simulations using the digital twin can help minimize risk while allowing progressive companies to embrace market opportunities. However, digitization and the ensuing increased analytic capabilities dramatically changes the role and required talents of the supply chain planner to one of solving business problems versus just manipulating supply chain data.
You can’t open a current supply chain periodical today without seeing something about artificial intelligence (AI). AI and its various related areas of machine learning, natural language processing and algorithmic optimization will all continue to capture significant mindshare in 2019. However, to fully take advantage of these advanced capabilities will require supply chains to shift how they operate. You can see examples of this shift as companies invest in their ability to analyze data. The global supply chain analytics solution market is approaching $5B annually with a 15% Compound Annual Growth Rate (CAGR). There is abundance discussion how AI will displace human labor, but in reality early adopters of AI for supply chain planning are experiencing more of an augmentation effect. So we need to start understanding how to live and embrace AI to augment our human abilities versus worrying about being replaced.
To take advantage of Analytics, Digitization, AI, Machine Learning, Blockchain, etc. companies need to build a strong foundation of analytics fluent talent, clean and repeatable Big Data, and integrated, real-time, collaborative supply chain solutions. Supply Chain Master Data Management (SCMDM) is quickly becoming a critical foundational capability that I expect to see supply chain leaders paying more attention to in 2019 and beyond. Much of the data used for supply chain planning and execution comes from outside a company’s ERP systems. Ask yourself, how is this critical data obtained and maintained at your company today? The answer might surprise and potentially scare you. Effective supply chain planning and optimization requires high quality and consistent data and the ability to easily and quickly maintain and update that data. Inconsistent and poor quality data will degrade confidence in recommendations. Bad data that leads to bad recommendations and decisions will degrade management’s confidence in the supply chain organization. Sounds like SCMDM might be one of those must haves to ensure job security.
It is an exciting time to be a supply chain planning professional. Change is happening at a staggering pace creating difficult challenges but also significant opportunities for those that are willing to embrace new technology and practices. The ‘Paradigm Pioneer’ is as relevant today as at any time in the history of supply chain management. Is your company ready to fundamentally alter its supply chain planning capabilities and open a new trail to the future? Logility is already working on the future of supply chain planning and optimization. Give us a call, we can help